JustAnswer
>
Tax
Ask A Question
|
Register
|
Login
|
Help
Tax
Ask a Tax Question, Get an Answer ASAP!
Have your own Tax question?
Tax Professionals are Online Now
characters left:
Not a Tax Question?
Related Tax Topics:
Gas
,
Pay
,
Tax
,
Cost
,
File
,
Live
,
Long
,
Loss
,
Loan
,
Plan
Question
If we rent out our primary residence, but merely rent somewhere else ourselves, do we loose the mortage interest tax deduction. What if we rented out for only 1/2 the year or less, OR located in a foreign country? We are being forced out of our home we bought in 2007 by our neighbor's excessive wood smoke that causes family members severe asthma and coughing (including our 4 yr old and newborn) We are suing for nuisance but expert witnesses/attorney will cost 50-70K. If we sell we can probably cover the remaining mortgage, but will loose 100K in deposit/improvements/ etc. My husband and I file jointly and usually run against alternative min. tax. We have a interest only loan for 1st 10 yrs (about 40K/yr + property taxes) Dont say try to settle cuz we've tried and they wont (we've offer to pay for a gas insert but they want to burn wood 24/7.)
Submitted: 23 days and 10 hours ago.
Category: Tax
Value: $30
Status: CLOSED
+
Read More
Optional Information
State/Country relating to question: California
Already Tried:
Everything.
Accepted Answer
Hello mich,
If you plan to convert a home that you own to a rental property, you can continue to deduct the mortgage interest and the property taxes the same as you have always done in the past. It will not matter that you plan to rent another place to live in rather than purchasing another home.
Taxpayers may deduct mortgage interest that they pay on their primary home and on a second home they own, regardless of whether or not the property is used for rental. In the case of rental properties, there are no restrictions. You could own 100 rental homes and deduct the mortgage interest on all of them, but you must also then declare the rental income as taxable income on your return.
When you have a rental property you will file Schedule E with your tax return. On Schedule E you will claim the amount of rental income that you receive, and you will then also deduct any expenses you had in connection with that property. This will include your mortage interest, property taxes, property insurance, any utilities that your furnish, cost of minor repairs and upkeep and depreciation on the value of the property itself.
After deducting all of your expenses from your rental income, you would then pay tax on any net income you have from the rental activity. If it ends up that you actually have a loss from the rental, then as long as you play an active part in the management of your rental property, you may deduct up to $25,000 in rental losses from other income that you have. This deduction is limited if your adjusted gross income exceeds $150,000 for the year.
If this was helpful please press the Accept button. Positive feedback is also appreciated.
Thank you mich and let me know if you have more questions
Expert:
Merlo
Pos. Feedback:
99.8 %
Accepts:
Answered:
10/29/2009
Accountant
25+ years tax consulting. Specializing in returns for US citizens living abroad
23 days and 10 hours ago.
Reply
We would likely have a net loss. Mortgage + property taxes + insurance is about $3,500/month. I know we can only rent for about $2,400/month. About a 13K/yr loss. But my husband makes about 200K including bonuses (Hey here in the San Francisco Bay area that's the min needed to get into a modest starter home). Because of the 150K limitation, will we have to eat the 13k loss, or can we deduct at least some of this 13K from my husbands work income.
Posted by
Merlo
23 days and 10 hours ago.
Answer
Hello again mich,
You would not be able to deduct any of the losses immediately due to his income, however, any losses which you have that cannot be used due to his income limitations can be carried forward and deducted when you sell the property. At the time you sell the property these losses will then reduce any taxable gain you have from the sale, so you would receive a tax benefit at that time from the accumulated losses.
One other thing I would like to point out. You cannot deduct your entire mortgage payment as an expense -- only the mortgage interest. I just want to make sure that is how you figured your monthly expenses.
If this was helpful please press the Accept button. Positive feedback is also appreciated.
Thank you mich.
+
Read More
Related Tax Questions
can i claim the monies taken off my cheques for my ...
On an installment sale, form 6252, line 12, what
Computation of taxable income. The following information
How do I set up anther e-mail address for a family member .....
taxes
Divorced; what do I pay taxes on and how?
Our son is 23 years old, full time student at a
how can I get a copy of my W-2 from 2001?